Boosting jobs and growth high on EU agenda
On 7 April, during a Eurogroup meeting held at the Grand Master’s Palace in Valletta, Ministers for Finance resumed discussions on promoting investment, jobs and growth, adopting a statement which sets out common principles as a guideline for member state
The Eurogroup is an informal body where ministers of the euro area member states of the European Union meet to ensure close coordination of economic policies among these member states and to promote conditions for stronger economic growth.
The discussion on investment initially started last July. The underlying principles include improvement of the business environment, increasing the efficiency of the public administration, prioritising high-quality public investment to boost growth and potential growth, developing market-based sources of business financing and removing regulatory barriers to private investment.
Generally, ministers agreed on enhancing public investment, a key cog that needs to be prioritised to boost growth in the short-term as well as potential growth in the medium- to long-term while ensuring full compliance with the Stability and Growth Pact – an agreement among the 28 member states facilitating and maintaining the stability of the Economic and Monetary Union (EMU).
Ministers also spoke about further developing market-based sources of business financing in order to widen the existing range of available forms of financing. The availability of non-bank sources of financing including venture capital, crowd-funding and market-based finance, can improve the resilience of euro area firms, SMEs in particular, when confronted with an adverse shock and provide new opportunities for cross-border activities.
Investment is explicitly addressed in the 2017 Council Recommendations on the economic policy of the euro area as well as in the 2016 Country-Specific Recommendations for several euro area member states.
Ministers reiterated the need to support investment by sustaining policies aimed at improving the quality and governance of public institutions. This includes measures for an effective judicial system and insolvency framework, fighting corruption and promoting more transparent, open and efficient public procurement.
Jobs and economic growth
During a joint Meusac-MCESD meeting on Malta’s National Reform Programme for 2017, held on 30 March, the Minister of Finance Prof. Edward Scicluna highlighted two important factors in the country’s economic performance: the fact that Malta registered a financial surplus for the first time in 35 years and Malta having one of the lowest unemployment rates in the EU (4.2%).
In its Country Report for Malta, published in February, the European Commission noted a number of positive developments registered last year in the labour market. In a context of sustained economic growth, the employment rate (20-64 years old) rose strongly to reach 69.8 % in the first quarter of 2016, up by 1% from the first quarter of 2015.
The unemployment rate decreased further to 4.6 % in the last quarter of 2016, one of the lowest in the EU and the lowest rate registered in Malta since EU accession in 2004. This growth reflects the creation of jobs, the take-up of economic opportunities by the growing working age population (partially due to migration inflows) and the rising labour force participation (especially of women, although current low levels are gradually improving). However, the Country Report also noted that the labour market still registered a rise in shortage of labour and skills.
The Commission also reported growth in employment, thus helping Malta to reach its national Europe 2020 employment target and pushing down unemployment to a record low.
According to Eurostat, the EU’s statistical office, the lowest unemployment rates registered in member states in February were in the Czech Republic, Germany and Malta. On the other hand, Greece and Spain registered the highest unemployment rates.
In Europe, moderate growth is expected this year and next year. Despite the many challenges, the European economy has proven to be resilient. Since the global economic and financial crisis, the EU has generally suffered from low levels of investment. Collective and coordinated efforts at European level are still very much needed to strengthen Europe’s path towards economic recovery.
A sound investment plan for Europe has the potential to bring investments back in line with historical trends. In addition, structural reforms such as the ones discussed during this month’s Eurogroup meeting will nurture the economic recovery and can provide further basis for sustainable growth. Neil Portelli is an executive within Meusac